By Brian Robins, director of business development for managed services, Bentley Systems
During the last 18 months we have seen a steady increase in the number of requests that we have received from architecture, engineering, and constructions companies to manage their software applications. The scope includes project design collaboration and work-sharing applications through to construction work packaging and asset management. The inquiries have come from brand name “starchitects,” global engineering companies, and local design/build firms, as well as state and local government agencies. What is motivating them is the increasing complexity of the information technology environment and the realization that while IT is an essential driver of efficiency and productivity, at the end of the day, it is in fact not their core competence.
At the same time, the megatrends of consumer technology, such as social, mobile, cloud, and Big Data, are being felt in the business-to-business world and especially enterprise IT. The consequences of this “consumerization of IT” are that expectations of usability and accessibility have been raised to levels that are beyond the reach of many, if not most, firms and that IT organizations are stretched so thin that they really need to refocus their scarce resources on the strategic issues that are truly mission-critical to the business.
Hence, CIOs and IT managers are increasingly looking to their software providers to not only sell and install software but also to manage it. More than that, CIOs and IT managers are asking how to get the most value out of the software, what are the best practices, and what are the benchmarks for their peer group? They want to pay for results not time and materials. In certain situations, architecture, engineering, and construction companies are going a step further and asking for help with document control, data quality management, and project information management and reporting. It all adds up to a strong trend towards managed services, namely the outsourcing of IT services management and project administration workflows and business processes.
So where is this all heading? If software is eating the world, as legendary Silicon Valley uber-geek Marc Andreesen says it is, how can you make sure that you are predator rather than prey? What are the top five things you should look out for in the world of managed services over the next 18 to 24 months? Here is my short list:
- It’s a hybrid world, after all. Many organizations are already running some of their corporate IT applications “in the cloud” including accounting applications and customer relationship management. Many CIOs and IT managers profess to have a “cloud-first” or “mobile-first” strategy. However, when it comes to graphics-intensive modeling applications and multi-layered BIM (building information modeling) models, it is not clear that running them and managing them in the cloud is always feasible. Bandwidth issues and network latency mean that exclusively cloud deployments are sometimes one step too far. Also given the huge investments in desktop applications, not every firm has the luxury of throwing them all out and starting over with a clean slate. Most IT organizations will continue to provision a mix of on-premise and cloud software for the foreseeable future. The cloud is not a silver bullet and most IT environments will continue to be hybrid. Where you can gain an edge is by finding the optimal combination of on-premise and cloud. This may involve caching servers and delta file transfers, where only changes are transmitted from local servers to be stored in the cloud rather than entire models. Also, look out for innovative “cloud-paging” technology, which “chops up” graphic-intensive modeling applications into “bite-size” pieces and enables them to be served up in a so-called jukebox and played on the desktop without having to do a local software install. Think of the time savings of not having to worry about configuring, upgrading, and maintaining software versions locally. We expect cloud-paging to be a very attractive option for many organizations that have significant investments in desktops and stringent requirements for performance.
- One size does NOT fit all. One of the reasons that Software-as-a-Service and applications running in the cloud are so cost effective is that they are multitenant — many companies are sharing a single instance of the software and are storing their data in the same database. Scalability is achieved because everybody is running the same application, normally the same version of the application, and the business processes and workflows are all standardized. But increasingly, organizations are opting for a private cloud or a private version of a public cloud, where they have greater assurance that their data is being properly safeguarded and where the CIO or IT manager can pinpoint a physical server in a rack in a data center and say to the organization’s project executives and program directors that their data is in safe hands. Moreover, some entities, particularly in state and local government, require specific configurations and want to preserve older versions because of published standards and dependencies. In these situations automatic software updates sometimes pose more of a headache than manual, labor-intensive machine-by-machine upgrades. It is certainly getting more and more challenging for IT organizations to keep desktops configured and IT staff have difficulty deploying applications consistently. Customized solutions are gaining favor with architecture, engineering, and construction companies and we detect a need for managed workspaces to meet very specific projects and situations. Here is where the value of managed services comes into its own. More than optimizing and streamlining standardized workflows and business processes, companies are looking for solutions that are really tailored for integrated project delivery.
- From cost reduction to organizational agility. The strategic objective and business justification for many IT implementations have up to now centered on cost reduction. Shaving percentages off the total installed cost or construction value has been the name of the game. An impressive catalog of case studies and project references proves the point. A look back at five years of submissions to Bentley’s Be Inspired Awards turns up example after example of process improvements and efficiency gains: 15 percent reduction in design time; time savings of 10 percent in project execution; ability to manage change requests resulting in time savings of more than 80 percent; time savings of 5 percent in clash detection; ability to prepare and issue engineering sets 50 percent quicker; 75 percent reduction in printing, scanning and mailing costs; plotting time reduced by 40 percent; reduction of construction administration hours; and so on. But future competitive advantage will be rooted in organizational agility. The next step on the stairway to value is rapid deployment, the ability to start up and ensure operational readiness no matter where in the world, no matter what the conditions, no matter who is part of the team. Managed services enable project cycles to be decoupled from procurement cycles. Where the IT or procurement organization gets tied up in red tape or is beholden to capital budgeting hurdles, managed services offers agility and flexibility with predictability and cost certainty. More and more, the trend in managed services is towards adding value not simply reducing costs. The days of “your mess for less” and offshore labor cost arbitrage are being superseded by world-class industry expertise and specialization to achieve excellence in project execution. Managed services are a means to de-risk project execution and protect profit margins.
- Bridging the gap between design and operations. For many years, the industry and its value chain have been very fragmented. However, just recently, huge progress has been made in bridging the gap between design and operations. There is growing awareness of the central role that information mobility plays in the lifecycle of assets and downstream asset performance. Increasingly owners are requiring asset information and building information models to be handed over to facilities managers, operations, and maintenance. The digital asset complements and co-exists with the physical asset. It is well understood that assembling the information for handover to the owner is not a task that can be scraped together in the latter stages of construction and quality assurance. It must be an activity that is an integral part of the project. Managed services are aiming to support the entire value chain, to help architecture, engineering, and construction companies as well as owners and operators, to achieve true information mobility. A prime example is construction work packaging. Work packaging software automates the production of construction work packages, installation work packages, and testing work packages. It aggregates a variety of project information, producing reports and dashboards to give stakeholders visibility into the current project status and progress.
- Outcome-as-a-Service. Finally, and perhaps most significantly, the trend in managed services is towards outcomes. Typically in an IT context, success is measured in terms of reliability and availability of the software. Clearly, without software applications and tools, business simply doesn’t get done. So a great deal of attention and IT budget goes into ensuring business continuity. CIOs and IT managers are held responsible for “Five 9’s” meaning that systems are available 99.999 percent of the time. In partnering with or outsourcing to managed services providers, these targets are usually encapsulated in a service level agreement (SLA) and key performance indicators (KPI’s) that are monitored closely. Financial penalties are sometimes assessed for inadequate service delivery and missed KPI’s. However, in the future we expect to be party to more and more discussions that focus on outcomes rather than inputs. Progressive and forward-thinking architecture, engineering, and construction companies are looking for a business relationship and commercial model that go beyond “pay-as-you-go” or “pay for what you use.” They are looking for business results that are predictable and measurable. Whether it is getting up and running in days/hours; supporting projects in remote regions/countries; deploying a consistent toolset worldwide; improving project visibility; minimizing design and construction delays; cutting out time from review cycles; strengthening business partnerships; or avoiding disputes and disagreements. In the future, companies will look to managed services providers to take responsibility for outcomes not just service levels.
The business value of managed services lies in transforming project delivery capabilities; access to world-class skills and technology innovation; and flexibility and scalability to take advantage of business opportunities. Managed services will continue to evolve as an effective business strategy in architecture, engineering, and construction. In fact, the future of software — and the future of many industries — will increasingly look like managed services: highly specialized workflows, capabilities, and business processes enabled by and underpinned by software.
Brian Robins is director of business development for managed services at Bentley Systems, and is based in San Francisco, CA. He has more than 30 years’ experience in IT and enterprise software mostly in risk management, business continuity, and managed services. His current focus is on helping architecture, engineering and construction companies drive improvements in cost, value and performance by leveraging managed services. Contact: firstname.lastname@example.org. For information, visit www.bentley.com/MANAGEservices.